Compared to most other developed countries, Australia's public finances are in "extraordinarily good shape", said BlackRock Australia head of fixed income Steve Miller speaking in Sydney on Friday.
Mr Miller was responding to comments by Treasury secretary John Fraser in a speech on Thursday which emphasised the "[importance] that Australia maintain its top credit ratings".
"Australia is one of only 10 countries with a triple A credit rating from all three of the major rating agencies, reflecting our reputation for fiscal prudence," Mr Fraser said.
"We should not be complacent about this. I know from personal experience during the financial crisis how important a strong credit rating is to investor confidence."
Mr Miller said that while Mr Fraser was not suggesting an "imminent" downgrade was likely, he was right to point out that government expenditure is currently above 25 per cent of GDP for only the fourth time in 20 years.
"That’s not a good look in terms of satisfying ratings agencies that you’ve got the right sort of momentum in place," Mr Miller said.
"I’m not expecting any imminent downgrade – what I’m expecting is a lot of headlines that might go there.
"Headlines will most probably intensify if there’s not some transparent and overt action on the part of the Commonwealth," he said.
The onus is on the government to address issues on the expenditure side of the business, including transfer payments, said Mr Miller.
"And that’s not to say things like the [National Disability Insurance Scheme] aren’t worthy – of course they are. But we need to find a way to pay for them through making savings elsewhere or addressing it via the taxation system," he said.